Cash flow guide
How to use the days sales outstanding calculator
Worked example
Days sales outstanding: calculation example
Beginning receivables of $50,000 and ending receivables of $62,000 average $56,000. Divide by $300,000 of net credit sales and multiply by 90 days to get 16.8 days.
Compare DSO with payment terms, prior periods, and the receivables aging report. Do not include cash sales in the denominator.
Common question
Understand the result
Is DSO the age of every unpaid invoice?
No. It is an aggregate estimate. Use an accounts receivable aging report to identify individual overdue invoices and collection priorities.